COMMENT FROM THE CAPITAL FIRM BASE NECESSARY FOR WAGES AND PRICES POLICY

Press, Volume CXIV, Issue 33438, 21 January 1974, Page 14

COMMENT FROM THE CAPITAL FIRM BASE NECESSARY FOR WAGES AND PRICES POLICY

/From CEDRIC MENTIPLAX)

WELLINGTON’. January 20.—The voicing’ of serious doubts by industrial leaders of the efficiency of the Government’s policy on the control of wages and prices is not new. As the 1974 work-year begins, however, there is an increasing feeling that in this sector, at least, pn . has replaced ordered development of a planned policy. If 1973 was a difficult year abroad as well as within New Zealand, it must be admitted that stable development was not helped by the making of many unheralded changes, usually by the amendment of regulations.

In an article written nearly five months ago (“The Press’’. September 3. 1973) I gave particulars of 19 regulations introduced since March 7. I commented then that: “Obviously there are more to come, for some of the later regulations have been invoked to offset the unforeseen effects of the previous ones, and no readily discernible pattern has emerged.’’ Recently the Deputy Leader of the Opposition (Mr Muldoon) referred to the 27 sets of price regulations passed by the Government during 1973. He reinforced his comment on their ineffectiveness by noting that the cost-of-living increase for 1973 was 10.2 per cent, and that the increase for the fourth quarter of 1973 (2.4 per cent) was the same as for the first. To employers generally, and to manufacturers in particular, their greatest frustration is that there is no firm base on which to plan future progress for an industry or individual firm. A I sharp emphasis has been i placed on the cutting of profit margins; and yet the Government has never ceased tampering with the basis of wage adjustment. Doubts as to whether there is an over-all prices policy have been considerably reinforced by what happened immediately before the holiday break. Important statements were made by

Ministers not directly . responsible for the administration of relevant portfolios, and vital changes were authorised by the Cabi;net when the Ministers most concerned with absent. Retailers’ protests As Minister of Trade and ■lndustry (Mr Freer) is vitally ■ concerned with prices, and j specifically with all the ini tricate work by which retail | margins and prices are to be | adjusted. This work was to be completed by December 3, but in the delicate period before this date Mr Freer was in Australia, engaged in discussions on the New Zealand - Australia Free Trade Agreement. There were many protests by retailers about the difficulty and inconvenience of putting the new rules into force so quickly. Some were heard by the Minister of (Overseas Trade (Mr Wal-j ( ding); others were inter-( Icepted by Labour back- ! benchers. Mr Freer was not called back from Australia (where| ;he was doing work which, (according to some, was; (more the concern of the (Minister of Overseas Trade). Mr Walding evolved his own plan, took it to Cabinet, secured what was apparently the unanimous agreement of those present, and announced that the margins and prices system would be delayed until March 1. A" new adjustment in the “Walding Plan” was to exempt from the system retailers whose annual turnover is less than $150,000. Another recognised that those already selling below maximum permitted margins were being unfairly treated in being required to reduce further. Although the deadline date had been allowed to approach before the decision was made, the timing could have been happier. Mr Wal-i ding announced the changes on December 4, Mr Freer returned from Australia that day. He must have been embarrassed by the questions of the journalists who met him.

In the brief breathing ; space before the Christmas holidays there were some ; confrontations between Labour members of Parliaiment and constituents who I were also retailers, wholesalers, manufacturers or employers engaged in the busijness of supply. Scheme unpopular For most people the pres-1 sures of 1973 were almost; over, and not much news-! paper space was given to retailers’ meetings in Wellington and Auckland. The deferment was hailed, but Wellington retailers still described the new measures as “harsher and more restrictive than in the wartime years.” There were signs that the whole price scheme was out of favour with a majority of the Cabinet, and that it was. even less popular in the. Labour caucus. The younger members, particularly in the Auckland area, feel some-, what frustrated about the. whole affair. There were some predictions that thei whole prices policy would! be abandoned. Then on December 20 the scene changed again. The Minister of Labour (Mr Watt) announced two amendments to the Econ-1 omic Stabilisation Regulations. However pleasant : these were to workers, they added to employers’ frustrations over the holiday period—and they were both amendments to previous regulations only a few months old.

The earlier regulation provided for the next wage adjustment order to be based on the extent to which the increase in the Consumers’ Price Index for the June-De-

tcember period exceeded four | per cent. Mr Watt's amendiment dropped the margin to I two per cent, thus guaranteeing a general rise, on the inext order, of at least 2.5 per cent. ! Mr Watt’s other amendjment put back the original provisions exempting the implementation of equal pay, before the amendments of i November 12. He claimed that the November 12 restrictions had proved too inflexible. In its way this was a damaging admission of lac.K of preparedness. The timing of these announcements was perhaps fortunate. People were too interested in the approaching holidays to worry about what would happen in 1974. If those most interested expressed their views, few people troubled to read and digest them. But as New Zealand returned to work, and as the deadline of March 1 loom-, very much closer, the situation is suddenly in sharp i foCUS. i What will happen in March or whenever the next set of regulations countermanding previous regulations is issued? What, indeed, will happen on Tuesday, when the Cabinet will have its first meeting of 1974? Much publicity has been given to the energy problem, and specifically to the plan Mr Freer is said have for the retail price of oil products, plus possibly the introduction of petrol rationing. This is important, but not more so than the maintenance of a firm base on which our productive effort may be planned. Reacting to Mr Watt’s amendments of December 20, Mr P. J. Luxford, executive j director of the New Zealand Employers’ Federation, commented: “A Government which a few months ago was determined to provide a baljanced package of price and wage controls now loosens wage restraints while maintaining some of the toughest price controls the country has ever known.”

Mr J. D. Bull, president of the New Zealand Manufacturers’ Federation, has even icharged the Government with a breach of faith. He believes the only way out would be a complete review of the price stabilisation regula tions, made as a matter of urgency.

A responsible policy ■ merely means the establishment of a structure on which i planning can be done at all I levels. Employers and manufacturers are not the only [groups seeking evidence of the existence of such a structure.